FAQ on Motor Insurans - General

If I buy a comprehensive motor policy, will all my losses be covered?

Not all losses will be covered by a comprehensive policy. Under a comprehensive policy, you will be covered for claims made by third party or parties for deaths, bodily injuries and property damage caused by your vehicle. You will also be covered for loss of or damage to your vehicle due to fire, theft or any accidental causes. However, there are many exclusions. You should check your policy for these exclusions.You should also note that deaths and bodily injuries of the driver and passengers of your vehicles are not covered under your comprehensive cover.


Why can't I choose to insure my vehicle at any value I think appropriate? When I make a claim, I expect the insurance company to pay me the amount I have insured my vehicle for.

It is essential to insure your vehicle at the market value and not any value you choose to avoid over-insurance or under-insurance.Over-insurance occurs when you insure your vehicle for a sum higher than the market value. When you make a claim, the insurance company will only pay you the market value of your vehicle. If you over-insure your vehicle, you have paid higher but unnecessary premiums.Under-insurance occurs when your sum insured is lower than the market value. In such a case, you are considered to ‘self-insure’ the difference between these two values. Therefore, in the event of damage, you have to bear your insured portion out of the total repair cost yourself. E.g. if you insured your vehicle up to 80% of the market value, the insurance company will only pay 80% of the total repair cost.Always check with the vehicle franchise holder on the market value of your vehicle to avoid under or over-insuring your vehicle. You may ask your insurance company/agent to confirm with the vehicle franchise holder on the appropriate amount of sum insured.


In an accident, when I am not at fault, how can I claim against the party at fault?

You have a choice either to submit your third party claim to the third party insurance company or, if you have a comprehensive policy, to submit your third party claim against your own insurance company. If you submit the claim to your own insurance company, you will not lose your NCD and the claim will be processed more speedily as the company already has your background information.However, you need to submit your claim for ‘compensation for actual repair time’ (CART) claims for compensation of ‘excess’ to the third party insurance company, which is responsible for such claims. The number of days for CART that you can claim is based on the number of days needed for your vehicle to be repaired as determined by the appointed adjuster assessing the damage to your vehicle.


If I am involved in a chain collision accident, who should I claim against?

In a chain collision accident, if there is damage to your vehicle (the procedure is not applicable for deaths and bodily injuries) you should claim from the insurance company of the vehicle immediately behind you and you will not lose your NCD. If your vehicle is the last vehicle in the chain collision, you will not be able to make any claim against the other vehicles involved. However, you can make an own damage claim from your insurance company if you have a comprehensive cover.


Even though my vehicle has been repaired after an accident, its value has gone down. Why can't I claim for depreciation since the accident was not my fault?

This is in line with the principle of indemnity. Your insurance policy will indemnify your loss/damage by putting you back to the similar position just before the accident. You therefore cannot 'profit' from an insurance settlement. When the damaged vehicle is repaired, it is restored to the condition before the accident. Hence, the issue of depreciation should not arise.


Why does the insurance company take such a long time to settle my claim for my stolen vehicle?

The insurance company will normally pay a theft claim within six months or when the police investigations have been completed, whichever is earlier. The time is required for the insurance company as well as the police to conduct their investigations and for the possibility that the vehicle can be recovered during the investigation.


When I made a claim to the insurance company of the vehicle that knocked into my vehicle, the company refused to pay my claim because its policy owner did not make any report. Why is this so?

An insurance policy is a contract between the insurance company and the policy owner. If the policy owner fails to report to the insurance company about an accident, the insurance company will not be able to entertain the claim made by any third party as the company has no contract with the third party.Therefore, the third party insurance company will only be responsible for handling your claim if its policy owner has requested it to step into his/her shoes for the loss/damage caused by him in the accident.However, for the convenience of the general public, insurance companies have agreed to entertain third party claims even though their policy owners fail to make a report. You need to submit the claim for the insurance company's consideration within 14 days from the date of the accident together with the following documents:a) a copy of your police report; b) a copy of the policy owner's police report, if available; c) if (b) is not available, your Statutory Declaration declaring the circumstances of the accident and identifying the policy owner's vehicle as a party to the accident; andd) a copy of the police investigation report or a notification by the police as evidence that the insurance company's policy owner was at fault.


Can the insurance company repudiate claims under the following scenarios?(a) A car lent to a friend who subsequently 'disappeared' with the car.(b) A car that is advertised for sale and one of the potential buyers takes the car for a test drive and fails to return.

These cases are deemed to be acts of criminal breach of trust and cheating. There is also negligence on the part of the car owner in not exercising due care as to whom the property has been entrusted to. Loss/damage arising from such cases are not payable as these are excluded under the insurance contract.

by: sseven wakil insurans AIG